Earnings Before Interest and Taxes

1. Little books inc. recently reported million of net income. Its EBIT was $6 million,  and its tax rate was 40%. What was its interest expense? [Hint; write out the headings for an income statement, and fill in the known values then divide $3 million of net income by (1-T) = 0.6 to find the pretax income.

 

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The difference between EBIt and taxable income must be interest expense, use this same procedure to complete similar problems. [2. Pearson brothers recently reported EBITDA of $7.5 million and net income of $1.8 million it had $ 2.0 million on interest expense and its corporate tax rate was 40%. what was its charge for depreciation and amortization?

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3. W.C. Cycling had $55,000 in cash at year-end 2014 and $25,000 in cash at year-end 2015 the firm invested in property, plants, and equipment, totaling 250,000 cashflows.

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Cash flow from financing activities totaled +$170,000a. What was the cash flow from operating activities b. If accruals increased by $25,000, receivables and inventories increased by $100,000 and depreciation and amortization totaled $10,000,  what was the firm’s net income.

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